Policy, carbon pricing, investment critical to Asia's energy transition: Panelists

Effective policy, competitive carbon pricing, and substantial investment will be pivotal in driving Asia's energy transition and industrial decarbonization, according to panelists at the Asia Climate Summit in New Delhi.

Saurabh Didi, the Director of the Bureau of Energy Efficiency (BEE), emphasized the importance of comprehensive policies that address a broad range of factors, including energy efficiency, carbon emissions, and emission intensity.

"Policies must encompass various aspects such as carbon pricing and emission targets, coupled with clear action plans to effectively shape the energy transition and decarbonization process," he said.

Highlighting a regional example, Nisa Hadid, an ESG and Energy Transition Specialist at the Indonesia Energy Transition Implementation Joint Office, pointed to the Indonesian government's initiatives to promote renewable energy.

She indicated that the policies introduced by Indonesia, particularly through the state-owned utility Perusahaan Listrik Negara, serve as a model for fostering energy transition and decarbonization.

PLN plans to add an additional 60 GW of capacity by 2040 while phasing out coal-fired power plants. This strategy aligns with the broader regional need for proactive measures to reduce reliance on fossil fuels and boost renewable energy.

Carbon pricing

In addition to policy frameworks, the panelists stressed the importance of establishing a competitive carbon pricing market. Saurabh Didi indicated that the carbon market will incentivize renewable energy development by creating economic value for reducing emissions.

Panelists suggested that a renewable energy carbon credit price in the range of $7-$10/mt CO2 equivalent would be optimal for attracting investment in renewable energy (RE) projects.

By establishing a meaningful price on carbon, the market can stimulate large-scale investments in clean energy technologies, further accelerating decarbonization across the region

Investments

The need for significant investment was also a key focus of the discussion. Nisa Hadid highlighted that Indonesia alone would require about $170 billion in investment by 2040 to achieve its renewable energy targets.

However, she pointed out that challenges persist, including limited lending capacities, high-risk perceptions from investors, and huge appetite from the lenders and investors,

Alistair Ritchie, Director of Asia-Pacific Sustainability of the Asia Society Policy Institute, said that for long-term success in the renewable energy sector, investors require stability and predictability.

"Long-term visibility is crucial. Industry players need to feel confident that they are investing in a positive, long-term trajectory," Ritchie said.

Saurabh Didi further elaborated that investment should not only focus on expanding renewable capacity but also on supporting key infrastructure elements such as energy storage, transmission systems, energy efficiency, and efforts to reduce emissions from existing plants.